Investor implications of divesting from fossil fuels

Irene Henriques and Perry Sadorsky

Global Finance Journal, 2018, vol. 38, issue C, 30-44

Abstract: There is a growing movement for both individual investors and large institutions to divest from oil companies, and from fossil fuel producers in general. This paper investigates the implications of doing so, by comparing three portfolios: (1) a portfolio that includes fossil fuel producing companies and utilities, (2) a portfolio that replaces fossil fuel producing companies and utilities with clean energy companies, and (3) a portfolio without fossil fuel producing companies, utilities, or clean energy companies. Using a range of measures, we find that portfolios that divest from fossil fuels and utilities and invest in clean energy perform better than those with fossil fuels and utilities. We also find that risk-averse investors would be willing to pay a fee to make this switch, even when trading costs are included.

Keywords: Clean energy; Divestment from fossil fuels.; GARCH; Oil; SRI (search for similar items in EconPapers)
JEL-codes: G11 G17 Q42 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1044028317300169
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:38:y:2018:i:c:p:30-44

DOI: 10.1016/j.gfj.2017.10.004

Access Statistics for this article

Global Finance Journal is currently edited by Manuchehr Shahrokhi

More articles in Global Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().